If only the rich knew what was best for them

Robert B. Reich

As President Barack Obama said in his inaugural address, America "cannot succeed when a shrinking few do very well and a growing many barely make it."

Not even the very wealthy can continue to succeed without a broader-based prosperity. That's because 70 percent of economic activity in America is consumer spending. When most Americans are becoming poorer, they're less able to spend. Without their spending, the economy can't get out of first gear. That's a big reason why the recovery continues to be anemic.

Almost a quarter of all jobs in America now pay wages below the poverty line for a family of four. The Bureau of Labor Statistics estimates that over the next decade, seven out of 10 growth occupations will be low-wage -- like serving customers at big-box retailers and fast-food chains.

At this rate, who's going to buy all the goods and services America is capable of producing? We can't return to the kind of debt-financed consumption that caused the bubble in the first place.

It's not a zero-sum game. Wealthy Americans would do better with smaller shares of a rapidly growing economy than with the large shares they now possess of an economy that's barely moving.

If they were rational, the wealthy would support public investments in education and job training, a world-class infrastructure (transportation, water and sewage, energy, Internet) and basic research -- all of which would make the American workforce more productive.

If they were rational, they'd even support labor unions -- which have proven the best means of giving working people a fair share of the nation's prosperity.

But labor unions are almost extinct. The decline of labor unions in America tracks exactly the decline in the bottom 90 percent's share of total earnings, and the shrinkage of the middle class.

In the 1950s, when the U.S. economy was growing faster than 3 percent a year, more than a third of all working Americans belonged to a union. That gave them enough bargaining clout to get wages that allowed them to buy what the economy was capable of producing.

But as of 2012 only 6.6 percent of American workers in the private sector were unionized, the lowest rate of unionization in almost a century.

But other nations subject to the same forces have far higher levels of unionization than America. Some 28 percent of Canada's workforce is unionized, as is more than 25 percent of Britain's and almost 20 percent of Germany's.

Unions are almost extinct in America because we've chosen to make them extinct.

Unlike other rich nations, our labor laws allow employers to replace striking workers. We've also made it exceedingly difficult for workers to organize, and we barely penalize companies that violate labor laws. (A worker who's illegally fired for trying to organize a union may, if lucky, get the job back along with back pay -- after years of legal haggling.)

Don't blame globalization and technological change for why employees at Walmart, America's largest employer, still don't have a union. They're not in global competition, and their jobs aren't directly threatened by technology.

The average pay of a Walmart worker is $8.81 an hour. A third of Walmart's employees work less than 28 hours per week and don't qualify for benefits.

Walmart is a microcosm of the American economy. It has brazenly fought off unions. But it could easily afford to pay its workers more. It earned $16 billion last year. Much of that sum went to Walmart's shareholders, including the family of its founder, Sam Walton.

The wealth of the Walton family now exceeds the wealth of the bottom 40 percent of American families combined, according to an analysis by the Economic Policy Institute.

But how can Walmart expect to continue to show fat profits when most of its customers are on a downward economic escalator?

Walmart should be unionized. So should McDonald's. So should every major big-box retailer and fast-food outlet in the nation. So should every hospital in America.

That way, more Americans would have enough money in their pockets to get the economy moving. And everyone -- even the very rich -- would benefit. As the president said, America cannot succeed when a shrinking few do very well and a growing many barely make it.

Robert Reich, former U.S. Secretary of Labor, is professor of public policy at the University of California at Berkeley and the author of "Aftershock: The Next Economy and America's Future." He blogs at www.robertreich.org.